Ahram Weekly

Flight to safety

The withdrawal of Naguib and Nassef Sawiris from their businesses in Egypt has cast a shadow over the future of big business in the country

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Al-Ahram Weekly

The news that Nassef Sawiris, founder of Orascom Construction Industries (OCI), Egypt’s largest listed company and a major global construction and fertilisers player, has decided on December to end the company’s legal presence in Egypt came as a shock to few in the country’s business arena, reports Sherine Abdel-Razek.

The move had been expected among the close circle of businessmen and market experts aware of the challenges facing many big employers the size of the Sawiris family companies. These challenges apparently caused the eldest and most popular of the Sawiris brothers to sell most of his investments in Egypt.

The Sawiris family is one of Egypt’s wealthiest Coptic dynasties that run a multi billion dollar businesses which put them on the Forbes list for the world’s wealthiest businessmen. The Three sons, Naguib Samih and Nassef Sawiris control a business empire with activities ranging from IT and fertilisers to construction and tourism.

Their father, Onsi Sawiris, started the empire in the 1970s through his work in Libya after late president Gamal Abdel-Nasser nationalised his holdings in Egypt in the 1960s.

While Nassef and Samih have tended to keep a low profile, Naguib Sawiris, the eldest son, has a reputation as a bold businessman sometimes involved in controversial business deals.

After Egypt’s 25 January Revolution, he started to be involved in politics as well, co-founding the Free Egyptians Party that secured 15 seats in Egypt’s first post-revolution parliament and owning the outspoken ONTV channel.

However, the 58-year-old entrepreneur, who built an emerging market telecoms empire that once stretched from North Korea to Algeria, seems to be fed up with the way things are going in Egypt.

After a series of business deals, the earliest of which dates back to before the 25 January Revolution, ended with his owning minimal stakes in the Mobile phone operator Mobinil and mother company OTHT. Sawiris sold his stake in ONTV to a Tunisian businessman in December in a move thought by many to mean that he was saying goodbye to his businesses in Cairo.

Soon after the deal was announced, it became no secret that Sawiris was not intending to stay in Cairo.

Even before selling ONTV, Sawiris had kept a low profile during the second half of 2012, in contrast to his strong presence in the political arena after the revolution or amid the controversies that his TV channel stirred up as a result of its criticisms of the former ruling Supreme Council of the Armed Forces (SCAF) or the Muslim Brotherhood.

It was in late January when Hassan Malek, the most influential businessman in the Muslim Brotherhood, invited Egyptian businessmen abroad to return to their homeland that Sawiris broke his silence.

In the last week of January, Sawiris wrote in the daily Al-Masry Al-Youm, of which he is a shareholder, that he planned to serve Egypt and its development despite his “fundamental” differences with the ruling Muslim Brotherhood.

He said he had left Egypt “despairing and grieving” when he saw that the goals of the revolution were being stolen and the opposition divided, and he criticised the Brotherhood regime for “taking over the legislative and executive apparatuses of the state, dominating the economy and changing its identity, excluding the opposition and silencing the media.”

Sawiris tried to buy Telecom Italia for three billion Euros last month. “I wanted to go to Europe because I was sick and tired after what happened to me in Algeria,” he said. “When you invest in the West, you are at least sure that law and order apply.”

While Naguib is the more popular, Nassef Sawiris, the youngest son, has a larger presence in the market.

Nassef formerly owned Egypt’s largest traded company, Orascom Construction Industries, which experts say is the largest company by market capitalisation, at $8.5 billion, and comprises almost a quarter of the capitalisation on the Egyptian Stock Exchange, followed by Egypt Telecom, which is worth less than half, at $3.7 billion.

Egyptian capital market experts said that 73 per cent of OCI shares were traded on the London Stock Exchange (LSE) and 27 per cent on the Egyptian Exchange (EGX).

Orascom and a group of American investors, among them Bill Gates of Microsoft, are currently finalising a $2 billion transaction in which Orascom will transfer its listing to the NYSE Euronext Exchange in Amsterdam.

While the move will benefit the company, as it will give it wider access to capital markets, including the Eurobond market, increase share liquidity and attract a new type of shareholders, OCI’s departure from the Cairo stock market will have an impact on liquidity and trading volumes at home.

Nassef has reportedly had problems with the authorities in Egypt, including a delay on a demerger of OCI’s construction and fertilisers unit, which was meant to take place last year but is still subject to approval by the government. The company is also in negotiations with the tax authorities over outstanding taxes.

For many in the business community, these developments represent a failure by the government to support large employers, which often pay the highest taxes and employ thousands of people.